US Defends AD Review of Tapered Roller Bearings at CAFC
The U.S. defended the Commerce Department's 2019-20 review of the antidumping duty order on tapered roller bearings from China before the U.S. Court of Appeals for the Federal Circuit, backing, among other things, the agency's decision to rely on the financial statements of Timken Romania alone as part of its surrogate value calculations and the decision to deduct the cost of Section 301 duties from respondent Shanghai Tainai Bearing's U.S. price (Shanghai Tainai Bearing Co. v. United States, Fed. Cir. # 25-1405).
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Filing a reply brief on Sept. 9, the government additionally argued that Commerce adequately supported its decision to cap the extra revenue Tainai reported from the collection of Section 301 duties and to exclude this revenue from the company's U.S. price. Lastly, the U.S. said Commerce properly denied Tainai a byproduct offset for its sale of scrap.
In the review, Commerce only used the financial statement of Timken Romania to calculate Tainai's surrogate values, rejecting the statements from two other Romanian companies, since "one company failed to make a profit and the other manufactured automotive components that were not similar" to tapered roller bearings. At the Federal Circuit, the government said the Court of International Trade correctly saw that "Tainai was partly responsible for the 'limited universe of financial statements' that were on the record" and approved of the agency's decision as a reasonable conclusion on which statement was the "least bad one."
The government added that Commerce's decision to apply the surrogate ratios it took from Timken Romania's statements to all of Tainai's reported factors of production, including "finished subcomponents," was fully supported. While Tainai said the use of these ratios "overstates the amounts of profit, overhead, and other expenses," the respondent doesn't explain "why Commerce should change its practice here, when Commerce’s calculation reflects the reality of Tainai’s business model of sometimes purchasing finished subcomponents from a separate manufacturer," the brief said.
In the case, Tainai challenged Commerce's decision to exclude the additional revenue it collected in connection with its Section 301 duties from the company's U.S. price. In all, Tainai noted three situations in which it bills its customers this additional amount: where Tainai sent one invoice with a single price that included the actual Section 301 duties and the additional revenue; where the exporter sent one itemized invoice that included the additional amount as a line item; and where the company sent two invoices, one for the cost of the goods and one for the Section 301 duties and additional revenue.
Commerce said that since Section 301 duties are "incidental" to entering the goods into the U.S. and the law requires adjusting U.S. price by U.S. import duties, charges related to the Section 301 duties shouldn't be included in the price. While Tainai said the purpose of Section 301 duties is similar to "non-deductible special duties," this claim "proves the opposite point: that section 301 duties remedy broad economic concerns rather than simply the effect of low-cost imported merchandise," the U.S. said.
Tainai also contested Commerce's decision to cap the extra revenue the respondent reported from the collection of the Section 301 duties and to exclude this revenue from the U.S. price. While Tainai said this revenue is attributable to the sale of tapered roller bearings, "Commerce reasonably determined from how Tainai designated the tariff fee as a separate charge, or even on a separate invoice, that the additional revenue arose from the sale of services" and thus should be capped at the amount of the duties and shouldn't be part of the U.S. price, the brief said.
The government emphasized the trade court's ruling that this revenue was "incidental to transporting the merchandise into the United States and was not a part of U.S. price."
Tainai also said Commerce improperly denied the company a byproduct offset, since it recorded its sale of scrap. In response, the U.S. said the agency "reasonably required" the company to provide evidence of its production of scrap and not just its sale of scrap to get a byproduct offset. Since the company couldn't provide that evidence, CIT "correctly sustained Commerce's decision," the brief said.